Gov. Schwarzenegger Calls for New Prisons, Schools and Dams

SACRAMENTO – Gov. Arnold Schwarzenegger on Tuesday proposed another huge round of borrowing to build prisons, schools and dams in a state of the state speech that also called for cleaner fuels to help curb global warming.

The borrowing proposals, which add up to $43.3 billion, are similar to ideas that were cut out of the enormous borrowing plan the governor put forth last year. The Legislature changed it and cut it in half, and voters eventually approved $42.7 billion in bonds in November.

Addressing a joint session of the Legislature, Schwarzenegger said he was bringing the ideas back because, "We are a big state, and we have big needs. And we have made a big down payment, but the job is not finished."

The governor is calling for $29.4 billion in general obligation bonds, which require voter approval, and $13.9 billion in lease revenue and other bonds, which the administration says would not need to be approved by voters.

Schwarzenegger said the state needs new prisons to relieve overcrowding, which he called a disgrace. The prisons are so full that the federal courts are threatening to intervene by capping the inmate population and potentially ordering early releases of criminals.

"Here are the court-ordered choices we face," Schwarzenegger said. "We build more prisons or the court takes money from education and health care and builds the prisons itself. Now I am not in favor of releasing criminals. I am not in favor of taking money from classrooms and emergency rooms to build prison cells."

Schwarzenegger also wants to spend $4 billion on new dams in Northern California and near Fresno, an idea Democrats and environmentalists vehemently oppose. He wants to spend another $500 million on ground water storage.

Schwarzenegger said the dams are necessary to store more of the water from Sierra snowmelt, which could be reduced by global warming. Two-thirds of Californians depend on the snowmelt for drinking water. Central Valley farmers also use it to irrigate their fields.

The school bonds would build 15,000 new classrooms and renovate another 40,000, in addition to the $10.4 billion school bond voters approved last year.

Schwarzenegger's finance director, Mike Genest, said the state can afford the new borrowing because it is paying off early the bonds voters authorized in 2004 to pay off the budget deficit that ballooned after the dot-com crash.

"We think this is affordable within the state's budget in the long run," he said.

Other independent financial experts said the proposed borrowing plan was so large that it could take days to fully analyze its impact on California's budget. Some economists immediately criticized the concept as shortsighted.

"The tendency for the state to borrow is extremely unwise," said Edward Leamer, director of the University of California, Los Angeles, Anderson Forecast. "It's pushing spending on to the next generation, and that's not fair and it's not wise ... Borrowing is not some magical way to pay for what the state provides."

Schwarzenegger also delved back into the global warming issue.

He said cars should run on cleaner-burning fuel to help reduce greenhouse gases, mostly carbon dioxide, that most experts say are warming the Earth's atmosphere. And he proposed that California become the first to develop a carbon fuel standard.

"Let us blaze the way, for the U.S., for China and for the rest of the world," Schwarzenegger said. "Our cars have been running on dirty fuel for too long. Our country has been dependent on foreign oil for too long."

Adding more ethanol to gasoline and using cars that burn natural gas and use hybrid and electric technology could help California reduce greenhouse gas emissions by 10 percent, said Robert Sawyer, chairman of the California Air Resources Board.

That will go a long way toward meeting the requirements in the landmark global warming bill Schwarzenegger signed last year.

The governor will lay out his budget on Wednesday and he promised it would "dramatically reduce" the state deficit without raising taxes. However, the governor faces a budget gap of $5.5 billion.

He also is proposing an ambitious plan to extend health coverage to California's 6.5 million uninsured people.

Democratic leaders also pledged to work with the Republican governor, but said they would not support budget cuts that hurt the poor.

"We won't take breakfast away from poor children and will not allow Wall Street traders to control our fight against global warming," Senate President Pro Tem Don Perata, D-Oakland, said in a televised Democratic response to the state of the state.

"It's not what the governor says in January; it's what he signs in November," he added.